Making a big splash in recent weeks, Science Applications International
Corp. bought two companies, adding new capabilities in cybersecurity,
energy and disaster recovery — areas in which government spending is
expected to grow.

In early July, SAIC bought Seattle-based R.W. Beck Group Inc., with
its 550 technical business consultants, and Beck Disaster Recovery
Inc., an emergency management consulting firm.

Just a week later, SAIC announced it had acquired cybersecurity
product testing company Atlan Inc., based in McLean, Va. Atlan tests
and certifies cryptographic modules, including software and hardware,
to ensure compliance with National Institute of Standards and
Technology security standards.

But it was last year’s lack of an aggressive acquisition strategy,
rather than the company’s recent burst of activity, that is anomalous,
said Ray Bjorklund, senior vice president and chief knowledge officer
of government research company Federal Sources Inc. “Things have
understandably been quiet in some areas while the company’s been
getting over the shock of the [initial public offering], which can be
quite a shock — both positively and negatively,” he said.

The defense contractor seems to be well recovered from its October
2006 IPO — SAIC announced June 24 that its quarterly revenue had grown
by 12 percent, to $2.7 billion, with net income up 13 percent, to $116
million, thanks in large part to higher government spending on
cybersecurity and defense.

The company expects the Atlan acquisition will swell coffers by
adding to its cybersecurity offerings and through an anticipated
concurrent growth in Atlan’s business. “We’ll be able to extend our
work to the Common Criteria market, in addition to enhancing our
ability to provide quality [Federal Information Processing Standard]
140-2 and SCAP testing to a larger marketplace,” said Edward Morris,
FIPS laboratory director at Atlan.

“I think they had to settle things out in the public marketplace
before they went back to their normal mode of operating, which is
buying small companies that they lash together and integrate so that
they can go after new business,” Bjorklund said.

In June, SAIC won a $357 million task order from the Army
Tank-Automative Command's Life Cycle Management Command to support the
Joint Program Office, Mine Resistant Ambush Protected Vehicle by
providing MRAP Joint Logistics Integrator and Operational Readiness
Services.

But even dramatic cuts in Defense Department programs are unlikely
to hurt SAIC, Chief Executive Officer Ken Dahlberg said in a June
earnings call. “The overall defense budget and the ops and maintenance
component are both up about 4 percent,” he said, “so we should have
solid funding through at least September 2010.”

For example, SAIC was recently named one of three winners on the
Navy’s Net-Enabled Command Capability contract, worth as much as $55.4
million for SAIC.

Additionally, Dahlberg said, “the proposed defense budget increases
funding for ISR and military health care, which are good markets for
our company.” In one recent award, the company stands to collect $158
million to continue supporting DOD’s health information management
system.

SAIC won nine recompetes of more than $50 million in the first
quarter, Dahlberg said. “We now have 161 $100 million plus
opportunities in our pipeline, compared to 138 one year ago," he added.
"Moreover, 118 of those 161 large opportunities have an expected award
date within the next four quarters.”

With its core consulting and engineering organization going to
SAIC’s energy, environment and infrastructure business unit, the Beck
acquisition is expected to boost the company’s wins in upcoming
stimulus package energy awards.

Although Dahlberg will be stepping down as CEO in September — to be
replaced by Walter Havenstein, former president and CEO of BAE Systems
Inc. — SAIC’s acquisition spree will likely continue. The company is
cash-rich, Dahlberg said, and plans to spend it. “We are in dialogue
with several companies, and I expect we will be able to augment our
strong organic growth with some strategic attractive acquisitions in
fiscal year 2010,” he told analysts. “Although we look for
opportunities across our entire business base, right now we see the
most potential in the energy, cyber and intelligence spaces."

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.